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Current Affairs

01/08/2018

“The new Republican tax bill could cut taxes – as well as spending for Medicare.”

People receiving Medicare benefits get nervous every time lawmakers start talking about cutting the amount of money spent on entitlements. The new tax bill Republicans are promoting could cut taxes – as well as spending for Medicare. It may not seem logical that a tax cut could hurt Medicare, so you may be wondering, how might the new tax bill affect Medicare?

The New Tax Plan Could Result in Billions of Dollars Taken from Medicare

In an effort to keep our national debt from going completely out of control, budgetary rules require automatic spending cuts whenever Congress passes bills that increase the deficit more than $1.5 trillion over a ten-year period. The Republican tax plan is expected to do just that, so statutory “paygo” (pay-as-you-go) rules will impose automatic cuts to many programs. The Committee for a Responsible Federal Budget (CFRB) estimates that the new tax bill will result in mandatory cuts to these programs:

The Congressional Budget Office says that Medicare will get hit with $25 billion in spending cuts, unless Congress works out a way to avoid hurting the program. It is possible for Congress to prevent the automatic cuts, but it would take votes from both Republicans and Democrats to make that happen. It would take 60 votes to override the automatic cuts, and there are 52 Republican senators. In the current political climate, Republicans and Democrats are struggling to work together.

Even if Medicare Dodges the Paygo Bullet

If Congress manages to work together to save Medicare from massive automatic spending cuts in 2018, Republicans have made it clear that they plan to make changes to American entitlement programs next year. According to House Speaker Paul D. Ryan (R-Wis.), Republicans in Congress intend to reduce the national deficit by cutting federal health-care and antipoverty programs. “It’s the health care entitlements that are the big drivers of our debt,” he said in a recent radio interview.

Ryan is trying to talk President Trump into going back on his campaign promise not to cut spending for Medicare, Medicaid, or Social Security. Other congressional Republicans blame Social Security and Medicare for our national debt, saying that entitlement programs do not help the poor, they just trap people in poverty and increase the deficit. THIS IS YOUR MOTHER AND GRANDMOTHER THEY ARE TALKING ABOUT who paid into Medicare their entire life so they would have these benefits when they couldn’t work anymore.

Some argue that Republicans are using the new tax plan to intentionally create a large deficit, in order to trigger the “paygo” automatic cuts to Medicare. Republicans counter that they want to enact reforms that give people more choices and create more competition in the healthcare industry. They claim their reforms will improve the quality and reduce the cost of healthcare. They suggest that government-run healthcare is a big part of the problem.

These laws can change rapidly and with little notice and the administration of federal healthcare is different in every state, so please talk with an elder law attorney near you.

08/04/2017

The American Health Care Act (AHCA) is dead for the moment but there is Republican sentiment to resurrect it so you need to know how it will impact you.

“Under the per capita cap, the federal government would pay a flat rate per person for Medicaid services, regardless of how much the services actually cost.”

The American Health Care Act (AHCA) limits the federal contribution to state Medicaid programs. This limit, also called a “per capita cap”, applies to every person on Medicaid: the elderly, children, parents and people with disabilities. To know how these cuts may affect you requires an understanding of Medicaid per capita caps.

The Congressional Budget Office (CBO) analyzed an earlier version of the AHCA and found that many people will lose Medicaid benefits under the AHCA. The CBO also found that individuals who survive the Medicaid cuts are at risk of having their benefits and services reduced. The CBO has stated that every state will lose funding under the Medicaid per capita caps of the AHCA, yet some politicians deny this to their constituents. Some politicians even claim they will get more resources under the caps, despite what the CBO says.

Current federal government contributions to Medicaid

The federal and state governments jointly fund Medicaid. The federal government’s portion of the cost of Medicaid services is calculated using a statutory mathematical formula. If the cost of providing care to people increases, then the federal government’s contribution to the program increases.

How the AHCA per capita cap changes federal funding of Medicaid

Under the per capita cap, the federal government would pay a flat rate per person for Medicaid services, regardless of how much the services actually cost. A state would get the same federal money for a healthy person as for an individual with a dire medical condition who needs significant medical intervention to survive. This block grant or per capita cap model would require states to make up the difference or cut services. 11 million seniors and people with disabilities could be affected by the cuts.

The proposed per capita cap would take effect in the year 2020. The initial cap would reflect how much the states spent per enrollee in 2016. The feds plan to adjust the cap every year, based on the Consumer Price Index for Medical Care (CPI-M).

The ripple effect – Medicare could also suffer

Since Medicaid helps with some costs that Medicare does not cover, such as Medicare premiums, nursing homes and long-term care, many people with low income will lose Medicare and other essential services. They cannot afford them without their Medicaid benefits. Twenty percent of all people on Medicare get help from Medicaid.

Would the proposed Medicaid per capita cap save the federal government any money?

There is no clear consensus on this issue. While some claim the AHCA per capita cap could cut federal Medicaid spending by $834 billion between 2017 and 2026, it is not clear if the cost of services would just shift to other federal programs. The result might be that the cost of services would come out of a different “pocket” rather than services being eliminated or reduced. Since the cap could increase every year according to the CPI-M, some argue that change, if any, would be negligible.

The proposed Medicaid per capita cap will affect every state in different ways. To find out where you stand, contact an elder law attorney in your area.

02/23/2017

Medicaid, the single largest source of health coverage in the United States, provides health coverage to almost 75 million Americans, including children, pregnant women, parents, seniors, and individuals with disabilities.

Medicaid is a federal program, but it is administered by the states. To participate in Medicaid, federal law requires states to cover certain groups of individuals, such as low-income families and individuals receiving Supplemental Security Income (SSI). States may choose to cover other groups, such as individuals receiving home- and community-based services.

Funding for the Medicaid program comes from both the federal government and the individual state governments. Currently, the federal government gives each state a specified percentage of its program expenditures. This Federal Medical Assistance Percentage (FMAP) is based primarily on the per capita income of the state receiving assistance, so it can vary widely from state to state. For example, a rich state like New Jersey might receive $1 from the federal government for every dollar it spends on Medicaid while a poor state like Mississippi would receive $3 for every dollar it spends. The FMAP is adjusted every three years to account for changes in the economy.

Conservatives have long argued that Medicaid would be more efficient if states received a lump sum—a block grant—from the federal government and could then manage the programs as they saw fit. President Ronald Reagan proposed block grants in 1981, Speaker Newt Gingrich in 1995, and President George W. Bush in 2003. President Clinton agreed to block grants with the Temporary Assistance for Needy Families (TANF) program. Now that Donald Trump is President, and Republicans have control of both the House and the Senate, block grants are back on the table.

Proponents claim this could save the government billions of dollars and give the states more opportunity to be creative with their programs. Critics are afraid that people will not have access to the care they need. They are concerned that the states would cut benefits or force beneficiaries to take on more cost-sharing. Most of the Medicaid spending is on the elderly and disabled, with Medicaid paying for the care of almost two-thirds of the people in nursing homes, and critics are afraid they will suffer the most. In addition, they claim hospitals and clinics that treat large numbers of Medicaid beneficiaries will likely have to adjust their services and staff.

Of course, this is all speculation right now as no details on a block grant plan are available. But they may be coming soon. Republicans have placed a high priority on repealing and replacing Obamacare. That, and portions of a block grant proposal, could be accomplished through a process called budget reconciliation. Because it would only require 51 votes in the Senate, a Republican plan could pass without Democrat support. If a block grant plan for Medicaid is included, look for details on the implementation and see how the critics’ concerns are addressed.